SM ENERGY ANNOUNCES CLOSING OF UINTA ACQUISITIONS - SIGNIFICANTLY EXPANDING ITS TOP-TIER PORTFOLIO

Rhea-AI Summary

SM Energy Company (NYSE: SM) has closed the previously announced Uinta Basin acquisition, acquiring an 80% undivided interest in the oil and gas assets of XCL Resources, and affiliated entities. The Uinta Acquisitions, totaling $2.1 billion, add a third core area to SM's portfolio, including:

• Approximately 63,300 net acres
• An initial estimate of 465 net locations normalized to 10,000 foot laterals
• High oil content production at approximately 86%-87% oil
• Estimated net proved reserves of approximately 110 MMBoe
• A centrally located sand mine

The acquisition has an effective date of May 1, 2024, with a closing cash payment of $1.9 billion on October 1, 2024. SM Energy plans to fund the acquisition using proceeds from its recent $1.5 billion senior notes offering, cash on hand, and borrowings under its Credit Agreement.

Positive

• Acquisition of 63,300 net acres in the Uinta Basin, expanding SM's portfolio
• Addition of 465 net drilling locations, increasing future development potential
• High oil content production (86%-87% oil) enhancing revenue potential
• Estimated 110 MMBoe of net proved reserves, boosting SM's reserve base
• Acquisition of a centrally located sand mine, potentially reducing operational costs

Negative

• Significant acquisition cost of $2.1 billion, potentially impacting the company's financial position
• Increased debt load due to $1.5 billion senior notes offering and additional borrowings
• Potential integration challenges and costs associated with merging operations

News Market Reaction

+1.45%

1 alert

+1.45% News Effect

On the day this news was published, SM gained 1.45%, reflecting a mild positive market reaction.

Data tracked by StockTitan Argus on the day of publication.

DENVER, Oct. 2, 2024 /PRNewswire/ -- SM Energy Company (the "Company") (NYSE: SM) announced today that it has closed the previously announced Uinta Basin acquisition of an 80% undivided interest in the oil and gas assets of XCL Resources, LLC and affiliated entities, which includes the exercise of its option to acquire certain additional assets adjacent to XCL Resources position (collectively, the "Uinta Acquisitions").

President and Chief Executive Officer Herb Vogel comments: "We are excited to add a third core area of very high-quality assets to the SM portfolio. We look forward to welcoming new employees to the SM team from XCL Resources and Altamont Energy and to working in our new Utah communities. The Uinta Acquisitions add significant scale and long-term value creation opportunity for SM Energy via high-quality, oily stacked pay with outstanding well economics."

The Uinta Acquisitions add:

• Approximately 63,300 net acres
• An initial estimate of 465 net locations normalized to 10,000 foot laterals
• High oil content production at an approximately 86%-87% oil
• Estimated net proved reserves of approximately 110 MMBoe (as of the effective date)
• A centrally located sand mine (on company-owned surface acreage) that initiated operations in late September 2024

The Uinta Acquisitions totaled $2.1 billion (net to the Company's interest) and have an effective date of May 1, 2024. Cash paid at closing on October 1, 2024 totaled $1.9 billion, which is net of the $102 million previously paid deposit. The final purchase price will be subject to customary post-closing purchase price adjustments. SM Energy intends to fund the Uinta Acquisitions with a portion of the proceeds from its recent $1.5 billion offering of senior notes issued in July 2024, together with cash on hand and borrowings under its Credit Agreement.

FORWARD LOOKING STATEMENTS

This release contains forward-looking statements within the meaning of securities laws. The words "anticipate," "estimate," "expect," "intend," "plan," "will" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, which may cause SM Energy's actual results to differ materially from results expressed or implied by the forward-looking statements. Forward-looking statements in this release include, among other things, plans and expectations with regards to the Uinta Acquisitions and planned financing sources; certain operational and financial projections, including: the number of acres acquired, future locations and inventory, projected production metrics and oil mix, expected proved reserves to be acquired and the increase in total Company estimated net proved reserves. General risk factors include the uncertain nature of acquisitions and other such matters discussed in the "Risk Factors" section of SM Energy's 2023 Annual Report on Form 10-K, as such risk factors may be updated from time to time in the Company's other periodic reports filed with the Securities and Exchange Commission. The forward-looking statements contained herein speak as of the date of this announcement. Although SM Energy may from time to time voluntarily update its prior forward-looking statements, it disclaims any commitment to do so except as required by securities laws.

ABOUT THE COMPANY

SM Energy Company is an independent energy company engaged in the acquisition, exploration, development, and production of crude oil, natural gas, and NGLs in the states of Texas and Utah. SM Energy routinely posts important information about the Company on its website. For more information about SM Energy, please visit its website at www.sm-energy.com. 

SM ENERGY INVESTOR CONTACT

Jennifer Martin Samuels, jsamuels@sm-energy.com, 303-864-2507

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SOURCE SM Energy Company

FAQ

What is the value of SM Energy's Uinta Basin acquisition?

SM Energy's Uinta Basin acquisition totaled $2.1 billion for an 80% undivided interest in the oil and gas assets of XCL Resources, and affiliated entities.

How many net acres did SM Energy acquire in the Uinta Basin?

SM Energy acquired approximately 63,300 net acres in the Uinta Basin through this acquisition.

What is the oil content of the production from SM Energy's new Uinta Basin assets?

The production from SM Energy's newly acquired Uinta Basin assets has a high oil content of approximately 86%-87% oil.

How is SM Energy funding the Uinta Basin acquisition?

SM Energy is funding the acquisition with proceeds from a $1.5 billion senior notes offering, cash on hand, and borrowings under its Credit Agreement.

When did SM Energy close the Uinta Basin acquisition?

SM Energy closed the Uinta Basin acquisition on October 1, 2024, with an effective date of May 1, 2024.